David Beier Op-Ed: The right way to address prescription drug costs

By Jim Greenwood & David Beier

Link to article at Stat News

With a new Democratic majority in the House pledging to address the rising cost of health care — including prescription drugs — a fundamental question arises: Will lawmakers focus on the real issues that can drain a family’s finances, or simply adopt extreme policies that fail to take on the underlying problems in our health care system?

As policy professionals from different sides of the aisle, we believe there is a right way to address these issues and a wrong way. The right way will reduce out-of-pocket costs for Americans, improve access to new medicines, and allow the United States to remain the global leader in medical innovation. The wrong way leads to price controls, weakened intellectual property protections, and restricted access to medicines, not to mention stifling innovation and doing little to make drugs more affordable.

Judging from the current state of the drug-pricing debate, we are concerned that policymakers will adopt the wrong approach.

Take Medicare, for example. Leading politicians are calling on the government to directly “negotiate” drugs prices under Medicare’s prescription drug program. But the Congressional Budget Office has concluded that this proposal won’t lower prices unless the government also restricts access to new medical breakthroughs.

Denying patients access to the medicines they need has never been popular. One proposal would give Medicare the power to directly negotiate drug prices. When the government doesn’t get the price its demands, federal bureaucrats would have the power to seize the drug developer’s intellectual property rights and give them to their competitors.

It gets worse. Another proposal would void the intellectual property of any drug with a price that exceeds the artificially low price controls set by foreign countries with socialized health care. This pricing scheme would apply to any medicine or treatment sold within the U.S. health care system, not just those provided through Medicare.

These ideas, known as compulsory licensing and international reference pricing, are counterproductive and antithetical to the best interests of patients. They fail the key test that any drug pricing proposal should have to pass: Are people who suffer from disease better off?

The United States develops more new medicines than the rest of the world combined precisely because we reject government price controls and assaults on intellectual property. Instead, our policies provide incentives for biomedical discovery through temporary market protection for innovators followed by generic competition.

This social compact works for all Americans — boosting our innovation economy, accelerating access to innovative treatments, and creating the most robust marketplace for cheaper generic medicines in the developed world.

If we go down the path of government control, we will destroy the delicate balance between innovation and competition. It costs on average $2.6 billion for each drug that successfully makes it to market, and more than 90 percent of clinical programs for new drugs ultimately fail. Further, more than 70 percent of drug development programs are being led by small biotechnology companies, which rely heavily on private-sector investments over a decade or more.

If forced to confront price controls and compulsory licensing, investors will put their money in the latest gadget rather than the next miracle cure. And if America targets its own innovators for such treatment, we can be sure that other countries would eagerly do the same for their innovators. The result? The number of new cures and treatments would be cut dramatically, which is bad news for the tens of millions of people who currently lack effective treatments.

That is a heavy price to pay when there is little evidence that compulsory licensing actually works. Indeed, there is no guarantee that any company receiving such a license would sell its copycat product for less, or that any savings would flow to patients. And what hasn’t been discussed is that when the government seizes property, it must pay reasonable compensation for it, creating a potentially significant liability for taxpayers.

The midterm election would be a missed opportunity if Congress fails to provide real relief to vulnerable patients and seniors. They and their families are too smart to accept a flawed bargain of potentially lower drug list prices in exchange for denial of robust access to the medicines they need today — and fewer new medicines tomorrow.

Rather than pursuing policies that will destroy innovation and harm patients, we need to adopt responsible reforms that make a meaningful difference in the lives of all patients by reducing their out-of-pocket expenses for prescription drugs and improving access to innovative medicines. There are numerous ideas available to help do just that, such as removing regulatory barriers to value-based pricing and capping what seniors must pay for medicines in Medicare.

We know what the right approach is for lowering prescription drug costs. All we need is for our elected policymakers to take it.

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